m127 auction enjoys brisk bidding, modest prices

Hiding in the dark at the left is the auctioneer (thanks to my limited flash).

An estimated 250 individuals filled the room in which six new condos listed for a total of $12.25 million in a building called m127 went up for auction today.

In bidding that accelerated in mere seconds before nearly reaching the final price, the units at 127 Madison Ave. sold for $8,431,500 including a 5 percent buyer’s premium.  The total represented a discount of 31 percent.

Excluding the penthouse, the price per square foot averaged $821, which strikes me as rather low for a condo in that area, but the building’s does have its drawbacks. (Because the penthouse sale is unconfirmed, I’m pretty much leaving it out in this post.)

In fact, comparing condo sales in the building’s zip code (10016), the average for two-bedroom apartments, of which only two traded in the last month, is $1,216 per square foot, according to the Online Residential (OLR) database. But I’m not positive whether that is a contract or asking price (and there’s a big difference, as you know).

For all condos in 10016, the average per square foot is $1,116 versus two bedrooms in the whole borough: $1,223.

According to the Miller Samuel appraisal firm, the average price per square foot for all Manhattan condos was $1,154 in the first quarter.  And the median sale price of two-bedroom condos was $1.330 million.

For the five two-bedroom condos sold at the auction, the median was $1.244 million; the average was $1,276,800.

Five of the units were offered without a reserve.  They were hammered down at prices ranging in descending order of $1.417 million for the 1,554-sf two-bedroom, two-bath apartment on the eighth floor to $1.229 million for the approximately same-size unit on the second floor.  (Prices include the buyer’s premium.)

The 2,255-sf  penthouse, which has three bedrooms, two and a half baths and a 338-sf terrace, went for only $2,049,500, subject to the developer’s approval; its listed price was $3.4 million, and the discount amounts to 40 percent.

David Nguyen offered the winning bid for the penthouse and hopes to live in it someday, he told the Wall Street Journal.  When the developer offered the penthouse, it reserved the right to reject the bid, and Mr. Nguyen said he is now worried that he may not be able to buy it.  Said he:

Its just a gamble that we are taking.  I work in finance and it is just another trade for me.

In the room, at the Hotel Roosevelt, a few more than 100 persons had registered to bid by the noon starting time, according to Scott Burman, one of the principals of Paramount Realty USA, which conducted the auction.

I spoke to three of the winning bidders, none of whom wanted to be identified.  Their reactions ranged from placid to stunned, but none expressed surprise at the results.

The soon-to-be new owner of the sixth-floor apartment said he was pleased with the outcome.  “I could have gone a little higher,” he confided.  He and his wife are paying $1.234 million for the place.  Describing himself as “in the business,” he said he was unsure whether he would live in the building.

Another bidder, who captured the eighth-floor condo, confessed that she had planned to stop before the $1.417 million amount that ultimately bested others.  Said she:

I just wanted to buy it–I’m an impulse buyer.

Her 21- and 23-year-old daughters will live in the apartment, which is just a couple of blocks from where she and her husband reside.  The impulse to buy came only within the last week, she added, when the family happened to pass by the building during an inspection for the auction.

The third bidder told me that she purchased the fifth-floor unit close her limit of $1.2 million.  Her successful bid was $1.17 million, which comes to $1.229 with the buyer’s premium.

In contrast to what the buyers paid in mid-2008 for the third- and fourth-floor apartments before Lehman’s implosion, ($1.6 million and $1.65 million, respectively) today’s winning bidders did exceedingly well.  And by the standards of today’s market, it seems that they have reason to cheer.

Although it was possible to buy two apartments at a time, no one took advantage of that opportunity.  I asked another of Paramount’s principals why the rule was changed suddenly on Friday to permit multiple purchases.  A few potential buyers had expressed an interest in turning apartments into duplexes, he explained.

As for the developer, he was nowhere to be seen, but then, I have no idea what he looks like.  I was told that he didn’t want to be in the room during the auction and that his whereabouts were unknown.

Although I have been critical about the auction, I have to say that Paramount could not have mounted the event more professionally or with better marketing.

The partners did a creditable job without, as I have seen elsewhere, creating a false sense of urgency during the auction by having floor personnel shout out false bids.

The first auction I covered was the failed event for Riverdale’s Solaria development, and I inadvertently seem to have become an auction aficionado as a consequence of my posts since then.

So, please don’t call me Ishmael: “auction maven” will do nicely instead.

If you haven’t had enough of the auction, you may want to check out tomorrow’s post.

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201

Malcolm@ServiceYouCanTrust.com
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